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Old 07-10-2011, 09:36 PM   #41
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I don't have any hard evidence, just an observation that the better-funded candidates win more elections. Do you really think that the parties would spend all that money if it didn't sway voters?

IMO, that is the primary reason that Republicans are attacking unions-- their goal is to destroy the funding of the Democratic party. The fact that they might get budget savings is a secondary consideration.

You talk about a "tyranny of the majority", but the wealthy of this country have done a remarkable job of lowering their tax burden over the last 30 years. If there really is a class war going on, the rich are the ones winning it.

Note that I don't have a good answer to the money problem. Campaign finance laws have been mostly useless. I don't think that they are likely to make much difference. The money always finds a way to get heard.

I think the fundamental problem is the medium of Television. The medium does not lend itself to reasoned debate, but to propaganda. People will buy almost anything if you advertise it well.

The success of Axe body spray proves that to me.


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Originally Posted by samclem View Post
I'd welcome any evidence you've got. I'd also agree with the general point that perhaps the only counterweight to a "tyranny of the majority" is the ability of those above the median income to make their position known through political speech--which they fund. This is another reason that campaign contribution limits and other barriers to the free speech are dangerous.

I'm guessing you won't agree.
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Old 07-10-2011, 10:13 PM   #42
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Quote:
Originally Posted by Hamlet View Post
You talk about a "tyranny of the majority", but the wealthy of this country have done a remarkable job of lowering their tax burden over the last 30 years.
Please show me how that works. Here is the percentage of AGI paid in income taxes by the top 10% of returns since 1987, and for the bottom 50% of returns (the definition of AGI changed in 1987, so that's as far back as comparable figures can go).

Format: Year
Top 10% Effective Tax rate
Bottom 50% Effective Tax Rate
1987
19.77%
5.09%
1988
19.18%
5.06%
1989
18.77%
5.11%
1990
18.50%
5.01%
1991
18.63%
4.62%
1992
19.13%
4.39%
1993
20.20%
4.29%
1994
20.48%
4.32%
1995
20.97%
4.39%
1996
21.55%
4.40%
1997
21.36%
4.48%
1998
21.42%
4.44%
1999
21.98%
4.48%
2000
22.34%
4.60%
2001
21.41%
4.09%
2002
20.51%
3.21%
2003
18.49%
2.95%
2004
18.60%
2.97%
2005
18.84%
2.98%
2006
18.86%
3.01%
2007
18.79%
2.99%
2008
18.71%
2.59% Source: IRS
Again, who is winning the "war" of shifting the income tax burden?
Top earners: Have sometimes paid more or less than 2008, but it has always been more than 18%
Lower earners: Have generally been on a downward trend, have never paid more than 6% of their income in FIT, and in 2008 paid the lowest rates in at least 21 years.

I agree that folks need to watch less propaganda on TV and start looking for facts.
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Old 07-10-2011, 10:43 PM   #43
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Originally Posted by ERD50 View Post
Special Credit? I dunno, but I'll stand by what I said - my definition remains consistent under all circumstances, the 'conventional' definition does not - that appears to be factual to me (mathematically correct).
I haven't the foggiest idea what you're getting at. What would it mean for a definition to be inconsistent? A statement or theorem, or the conjunction of a set of those, is inconsistent when it is always false. Definitions can be appropriate, useful, traditional, and a lot of things, but they can't be true or false, hence they can't be inconsistent. And what does mathematics have to do with factuality, anyhow?
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Old 07-10-2011, 11:11 PM   #44
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Originally Posted by Hamlet View Post
I would say that our voting system is currently being weighted to a large degree by the wealth people have.
In general, I support this. The only way democracy can possibly work in a society like America is if it is subverted. I pray for blizzards on election day.

Ha
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Old 07-10-2011, 11:11 PM   #45
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Three things--

1. Once again, you are picking out the only progressive piece of the tax picture. Income taxes are only 42% of Federal tax revenues. FICA, the other large part of the Federal revenue picture, is highly regressive. State and local taxes are generally regressive as well. Should we examine the rate a person making a million dollars a year pays in FICA compared to someone making $20,000? If you include the employer's half (and you should), that is substantial.

2. You show a relatively steady tax rate for the top 10% over the last 24 years, but their share of the income pie has exploded. If the tax code had held steady, their tax rate would have increased.

3. The big reductions in taxes have been in the capital gains and dividend rates. Huge wealth only translates to high AGI if they choose to realize income. Someone living off of wealth (earned by themselves or inherited) is paying much lower rates than they were in the 80s. They may be all over the income distribution, depending on how much income they choose to realize.

The person paying the highest tax rate in this country is the self-employed single renter making just over 100k/year. That person pays a much higher rate than the billionaire children of Sam Walton.

That doesn't make much sense to me.


Quote:
Originally Posted by samclem View Post
Please show me how that works. Here is the percentage of AGI paid in income taxes by the top 10% of returns since 1987, and for the bottom 50% of returns (the definition of AGI changed in 1987, so that's as far back as comparable figures can go).

Format: Year
Top 10% Effective Tax rate
Bottom 50% Effective Tax Rate
1987
19.77%
5.09%
1988
19.18%
5.06%
1989
18.77%
5.11%
1990
18.50%
5.01%
1991
18.63%
4.62%
1992
19.13%
4.39%
1993
20.20%
4.29%
1994
20.48%
4.32%
1995
20.97%
4.39%
1996
21.55%
4.40%
1997
21.36%
4.48%
1998
21.42%
4.44%
1999
21.98%
4.48%
2000
22.34%
4.60%
2001
21.41%
4.09%
2002
20.51%
3.21%
2003
18.49%
2.95%
2004
18.60%
2.97%
2005
18.84%
2.98%
2006
18.86%
3.01%
2007
18.79%
2.99%
2008
18.71%
2.59% Source: IRS
Again, who is winning the "war" of shifting the income tax burden?
Top earners: Have sometimes paid more or less than 2008, but it has always been more than 18%
Lower earners: Have generally been on a downward trend, have never paid more than 6% of their income in FIT, and in 2008 paid the lowest rates in at least 21 years.

I agree that folks need to watch less propaganda on TV and start looking for facts.
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Old 07-10-2011, 11:54 PM   #46
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Originally Posted by Hamlet View Post
Three things--

1. Once again, you are picking out the only progressive piece of the tax picture. Income taxes are only 42% of Federal tax revenues. FICA, the other large part of the Federal revenue picture, is highly regressive. State and local taxes are generally regressive as well. Should we examine the rate a person making a million dollars a year pays in FICA compared to someone making $20,000? If you include the employer's half (and you should), that is substantial.
And once again, it's proper to exclude FICA (and Medicare) because their benefit ratio is already highly progressive. Have payroll tax rates increased over this time period? If not, they've got nothing to do with your claim that the tax burden has been shifted from the wealthy to the poor.

Quote:
Originally Posted by Hamlet View Post
2. You show a relatively steady tax rate for the top 10% over the last 24 years, but their share of the income pie has exploded. If the tax code had held steady, their tax rate would have increased.
Pardon me, but I AM showing the tax rate. What are you talking about?

Quote:
Originally Posted by Hamlet View Post
3. The big reductions in taxes have been in the capital gains and dividend rates. Huge wealth only translates to high AGI if they choose to realize income. Someone living off of wealth (earned by themselves or inherited) is paying much lower rates than they were in the 80s. They may be all over the income distribution, depending on how much income they choose to realize.
If a person doesn't have income, then that "non-income" isn't taxed. It's the same whether a person chooses not to work an extra hour at McDonalds or chooses not to sell a stock. No income =no taxes. The tax rates I posted included all income that is included in AGI (cap gains, dividends, wages, etc). It has bounced around between 18.49% and 22.39% for the wealthy, and in 2008 it was still in that range: 18.71%. Meanwhile, FIT rates for the bottom 50% of Americans by AGI have been on a fairly steady downward slope and were at their lowest point in 2008 (2.59%). A wealthy person (top 10% of AGI in the US) pays over 7 times the FIT on each dollar earned as those in the lower 50% of AGI. Still not "fair" enough for you?

It's been fun, but I'm bowing out of this one now.
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Old 07-11-2011, 08:37 AM   #47
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I agree with the bolded portion, and cite the balance of your post as an example. Your red state/blue state hypothesis suffers from data aggregation errors and is effectively countered by the study synopsis here. In part (emphasis added):
And the reverse: The poorer a voter is, the more likely the voter will vote Democratic. And to the degree poor people receive more benefits than they they pay for, and to the degree Democrats are more likely to favor increasing these benefits, my previous point is supported.

The whole idea that "Blue states vote for X" obscures the point that the state "votes" for whoever a majority of their voters choose. It's those voters, not the states, who are apparently voting for their economic self-interests.
Your link was to an article about wealth and partisan voting - nothing to do with my post.

I mentioned something that is apparent in tax data but really for me meaningless - that some states pay more and receive less in federal funds, while others pay less and receive more, and there are partisan trends there.

The bigger point, however, continues to be the entire discussion about who pays and who benefits is a red herring. Everyone benefits because the US social, cultural, legal and and physical infrastructure enables the creation of wealth, and the greatest benefit is to those that generate the greatest wealth. Taxes are the cost of that wealth generation and most folks acknowledge that. Stop paying them and what will suffer most is the capacity to generate wealth.
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Old 07-11-2011, 08:37 AM   #48
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I'm not really looking to increase the slope dramatically. Mostly I want that slope maintained at relatively recent levels.

For example, I'm strongly against the Republican's constant efforts to remove all taxation from dividends, capital gains, and estates.

I would set the capital gains and dividend tax rates back to 20%, and set the estate tax at whatever the highest marginal income tax happens to be, with a 5 million dollar inflation indexed exemption.

I would make hedgefund managers pay the same tax rates as everyone else, rather than allowing them to treat their earned income as long term capital gains.

We currently have Federal tax revenues bringing in less than 15% of GDP. That is not sustainable, unless we go back to pre-FDR government ideas (remove SS and Medicare).

I advocate trimming back deductions and loopholes to start getting us back to the historical norm of federal taxes at 18% of GDP.

We are still going to have to have a tough conversation about spending, but determining that all-time low taxation levels are now the absolute highest we can have is insane.



Quote:
Originally Posted by ERD50 View Post
Fair enough, but I just feel it lessens the meaning of the word - it just gets fuzzy. And I'm also in favor of a progressive tax system. I think it just makes sense on many levels. What the slope should look like is a big question.
-ERD50
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Old 07-11-2011, 10:33 AM   #49
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FICA, the other large part of the Federal revenue picture, is highly regressive. .
That isn't really true. While FICA appears to be regressive on the collecting end, it is highly progressive on the payout side. Sure, someone with a low lifetime income pays a higher percentage of income than someone who earns above the taxable level max. But that same low income person receives a far higher percentage of his income as an SS benefit at retirement. You need to take that into account. It's part of the SS benefits calculation formula.

SS has a much better ROI for the low income folks than for the high income folks.
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Old 07-11-2011, 10:45 AM   #50
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Your link was to an article about wealth and partisan voting - nothing to do with my post.

I mentioned something that is apparent in tax data but really for me meaningless - that some states pay more and receive less in federal funds, while others pay less and receive more, and there are partisan trends there.

The bigger point, however, continues to be the entire discussion about who pays and who benefits is a red herring. Everyone benefits because the US social, cultural, legal and and physical infrastructure enables the creation of wealth, and the greatest benefit is to those that generate the greatest wealth. Taxes are the cost of that wealth generation and most folks acknowledge that. Stop paying them and what will suffer most is the capacity to generate wealth.
Certainly has not been true in Hong Kong, or in the US in times prior to WW2 when we had low taxes.

In fact, what you put forth as a causation may be really be wroking in the opposite direction.

Ha
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Old 07-11-2011, 10:45 AM   #51
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.., but I'll stand by what I said - my definition remains consistent under all circumstances, the 'conventional' definition does not - that appears to be factual to me (mathematically correct). IMO, there should be two different terms used, but I certainly don't expect Websters to adapt to my view. But I can still point out the inconsistency, no?

-ERD50
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Originally Posted by GregLee View Post
I haven't the foggiest idea what you're getting at. What would it mean for a definition to be inconsistent? A statement or theorem, or the conjunction of a set of those, is inconsistent when it is always false. Definitions can be appropriate, useful, traditional, and a lot of things, but they can't be true or false, hence they can't be inconsistent. And what does mathematics have to do with factuality, anyhow?
Well, this is probably a waste of time, but humor me (I'm just having a bit of odd fun, discecting the English language) and I'll try to explain.

First off - ' What would it mean for a definition to be inconsistent?' , well the definition of 'inconsistent' is: "Not staying the same throughout; having self-contradictory elements."


So here is where I see the contradiction in the general usage of these terms:

An income tax can be levied as a:

A) Progressive Tax- Higher income is taxed at a higher % tax rate.
B) Flat Tax- The same tax % rate applies to all income.
C) Regressive Tax - Lower income is taxed at a higher % rate.
D) Head Tax - every person pays the same amount (as opposed to the same rate).

Something cannot simultaneously have a negative slope and have no slope. So something cannot be both a flat tax and a regressive tax. Yet...


Flat tax | Define Flat tax at Dictionary.com

Quote:
flat tax definition

A single tax rate that applies to everyone obligated to pay the tax. Sales taxes are flat taxes.
and the same source...

Regressive tax | Define Regressive tax at Dictionary.com

Quote:
regressive tax definition

A tax that takes a higher percentage of low incomes than high ones. Sales taxes, especially on food, clothing, medicine, and other basic necessities are widely cited as examples of regressive taxes
So there's a built in contradiction, no? It can't be both.


Consider a $1 sales tax on a bottle of liquor. I would call that a "Flat Tax" - they don't ask your income level at the cash register, it isn't assigned a different amount or rate based on income. So I call it a flat tax, and that also matches the definition above.

In this thread, that $1 liquor sales tax is being called 'regressive' because the $1 represents a higher % of a low income than a high income - again, it can't be both. But there is a second inconsistency:

Chauncey has a $100,000 income, and buys 100 bottles of liquor a year.
Joe has a $50,000 income and buys one bottle of liquor a year.

In this case, Chauncey pays a higher % of his income on this tax than Joe ((100/100,000 > 1/50,000). So how can it be 'regressive'? It is only regressive under certain circumstances, but it is always 'flat' (levied independent of income).

The English language is imperfect. I'm just pointing out that this is one of the imperfections, and it makes discussion difficult. I prefer to stick to the words that are consistent. Without extra words, I can't know what someone means when they say 'regressive'. As I see it, 'regressive' should be applied to how a tax is levied, and there should be some other term for it's effect. Sure, I'm being pendantic here ('Being finicky or fastidious with language'), but I think it comes from some of the programming I did - it was always trouble if a single variable ended up getting used two different ways, or two variables were used to represent the same thing.

-ERD50
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Old 07-11-2011, 11:01 AM   #52
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That isn't really true. While FICA appears to be regressive on the collecting end, it is highly progressive on the payout side. Sure, someone with a low lifetime income pays a higher percentage of income than someone who earns above the taxable level max. But that same low income person receives a far higher percentage of his income as an SS benefit at retirement. You need to take that into account. It's part of the SS benefits calculation formula.

SS has a much better ROI for the low income folks than for the high income folks.
Another red herring. Social security is a safety net that we all pay into, in part to protect ourselves and dependents from undesirable outcomes. To say it has a better ROI for low income folks is like saying life insurance has a better outcome for people that die. That's a design point. Everyone who pays into it would prefer a higher income but not all are so fortunate.
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Old 07-11-2011, 11:08 AM   #53
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Well, this is probably a waste of time, but humor me (I'm just having a bit of odd fun, discecting the English language) and I'll try to explain.

First off - ' What would it mean for a definition to be inconsistent?' , well the definition of 'inconsistent' is: "Not staying the same throughout; having self-contradictory elements."


So here is where I see the contradiction in the general usage of these terms:

An income tax can be levied as a:

A) Progressive Tax- Higher income is taxed at a higher % tax rate.
B) Flat Tax- The same tax % rate applies to all income.
C) Regressive Tax - Lower income is taxed at a higher % rate.
D) Head Tax - every person pays the same amount (as opposed to the same rate).

Something cannot simultaneously have a negative slope and have no slope. So something cannot be both a flat tax and a regressive tax. Yet...


Flat tax | Define Flat tax at Dictionary.com



and the same source...

Regressive tax | Define Regressive tax at Dictionary.com



So there's a built in contradiction, no? It can't be both.


Consider a $1 sales tax on a bottle of liquor. I would call that a "Flat Tax" - they don't ask your income level at the cash register, it isn't assigned a different amount or rate based on income. So I call it a flat tax, and that also matches the definition above.

In this thread, that $1 liquor sales tax is being called 'regressive' because the $1 represents a higher % of a low income than a high income - again, it can't be both. But there is a second inconsistency:

Chauncey has a $100,000 income, and buys 100 bottles of liquor a year.
Joe has a $50,000 income and buys one bottle of liquor a year.

In this case, Chauncey pays a higher % of his income on this tax than Joe ((100/100,000 > 1/50,000). So how can it be 'regressive'? It is only regressive under certain circumstances, but it is always 'flat' (levied independent of income).

The English language is imperfect. I'm just pointing out that this is one of the imperfections, and it makes discussion difficult. I prefer to stick to the words that are consistent. Without extra words, I can't know what someone means when they say 'regressive'. As I see it, 'regressive' should be applied to how a tax is levied, and there should be some other term for it's effect. Sure, I'm being pendantic here ('Being finicky or fastidious with language'), but I think it comes from some of the programming I did - it was always trouble if a single variable ended up getting used two different ways, or two variables were used to represent the same thing.

-ERD50
It can't be both, but there can be both a narrow and broad definition, and each is acceptable as long as it's intended use is clear. In the case of sales tax, economists usually apply it in a broad sense and consider it regressive.
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Old 07-11-2011, 11:12 AM   #54
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Another red herring. Social security is a safety net that we all pay into, in part to protect ourselves and dependents from undesirable outcomes. To say it has a better ROI for low income folks is like saying life insurance has a better outcome for people that die. That's a design point. Everyone who pays into it would prefer a higher income but not all are so fortunate.
I understand you wanting to dance around this Michael, but the fact is that FICA taxes are regressive in the sense that folks who earn above the max taxable limit pay a smaller percentage of their total income. But it turns around at payout time when SS pays low income folks a much, much higher percentage of their lifetime income as a benefit.

I'm not against that in any way. But, it is the way it is. SS, as it stands today, is a good deal for low wage earners vs. high wage earners. And appropriately so IMHO.

It's inaccurate and misleading to think of FICA and SS as regressive.
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Old 07-11-2011, 11:18 AM   #55
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It's inaccurate and misleading to think of FICA and SS as regressive.
Isn't the point of political speech to be inaccurate and misleading?

Ha
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Old 07-11-2011, 11:20 AM   #56
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The English language is imperfect. I'm just pointing out that this is one of the imperfections, and it makes discussion difficult.
I agree completely. It does seem that the terms "flat" and "regressive" are used inchangably depending on what the speaker's intent is.

Like you, I have no issue with "progressive" taxes. But I do find it irking when facts are bent to fit arguments proposing steepening the overall tax curve.
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Old 07-11-2011, 11:23 AM   #57
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Isn't the point of political speech to be inaccurate and misleading?

Ha


Oh geeeze...... Right when I'm taking all this crap way, way too seriously, you pop up and point out the humorous and obvious! You're right. I live in Illinois, so you'd think I'd know this since our politicians are beyond compare in this regard and I live with it everyday.......

Good one. Thanks!
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Old 07-11-2011, 11:35 AM   #58
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..., well the definition of 'inconsistent' is: "Not staying the same throughout; having self-contradictory elements."
...
C) Regressive Tax - Lower income is taxed at a higher % rate.
...
regressive tax definition

A tax that takes a higher percentage of low incomes than high ones. Sales taxes, especially on food, clothing, medicine, and other basic necessities are widely cited as examples of regressive taxes
You've given two definitions of "regressive tax" which, as you've shown, are inconsistent. They define different things. I understand how two definitions can be inconsistent. I still don't understand how a definition can be inconsistent.
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Old 07-11-2011, 11:40 AM   #59
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You've given two definitions of "regressive tax" which, as you've shown, are inconsistent. They define different things. I understand how two definitions can be inconsistent. I still don't understand how a definition can be inconsistent.
I think what's being talked about is two different difinitions of the same term being used in the same context.

I share ERD50's POV that "regressive" and "flat" are used inconsistently. And I think this is explained beautifully by Ha in post #55.
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Old 07-11-2011, 11:50 AM   #60
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I'm not looking to steepen the overall tax curve to any great degree. I would undo most of the Bush tax cuts, although if you repealed them all it probably doesn't have a huge effect on the steepness of the curve, as it also included tax cuts for the lower incomes.

I've very interested in preventing it from getting flattened, which appears to be the the way the wind is currently blowing.

Quote:
Originally Posted by youbet View Post
I agree completely. It does seem that the terms "flat" and "regressive" are used inchangably depending on what the speaker's intent is.

Like you, I have no issue with "progressive" taxes. But I do find it irking when facts are bent to fit arguments proposing steepening the overall tax curve.
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